Washington won’t mediate between Russia and Georgia on WTO

The Obama administration has been touting its progress in negotiations with Russia over Moscow’s bid to join the World Trade Organization, but the White House has no intention of helping Russia overcome the biggest remaining obstacle: Georgia.

National Economic Council Chairman Larry Summers was in Moscow last week, where he announced that "the end is in sight" for U.S. -Russian agreement on outstanding bilateral issues, such as Russia’s actions related to intellectual property rights. Summers also explained why Russia’s WTO membership is in America’s interest.

"The potential of this market for American business is very great… and it’s important for the goal President Obama has set for doubling exports over the next five years," he said.

But after Russia has satisfied Washington’s concerns on intellectual property protection, poultry issues, etc., it will have to choose whether or not to make concessions to Georgia. The two nations fought a limited war in 2008 and Russia still has troops deployed on Georgian soil to this day.

The Georgians may have been waiting for the Obama administration to approach them with an offer that would entice them to consent to Russia’s WTO membership. Any one WTO country can veto Russian accession and Georgia is the leading candidate to do so. Russia may have been waiting for Washington to pressure Georgia to drop their objections. A senior administration official told The Cable that both sides can stop waiting because Washington is not going to get involved.

"This is a bilateral issue between Russia and Georgia, this is not a trilateral issue that we are supposed to solve somehow," the senior administration official said, explaining that the Obama administration has no intention of trying to exert influence on Georgia on this issue and will not offer any carrots or sticks to Tbilisi.

"People somehow think we are going to mediate this between the Russians and the Georgians. That’s not our job," the official said.

The Obama administration’s position is that Russia should make the first move. It is unlikely that there will be membership for Russia if basic borders and customs issues are not resolved with Georgia, the official said.

"That has to be done before Russia joins the WTO," the official said. "And as it is Russia who is seeking to join the WTO, we would see it as up to them to come up with a way to start negotiations."

So what does Georgia want from Russia? Georgian Prime Minister Nika Gilauri spelled it out in an exclusive interview with The Cable.

"Georgia’s support to Russia’s WTO membership is conditional. The precondition is fulfillment of obligation taken by Russia in our bilateral accession protocol in 2004 and solving issues of customs administration on the Georgian-Russian border," he said. "Unregulated illegal trade as it takes place now is counter WTO rules. Russia should become member of this rules-based organization but only if it respects trade rules."

Of course, one huge problem is how to define the "Georgian-Russian border." If you are Georgia, that includes the borders between Russia and what the Obama administration calls the "occupied" Georgian territories of Abkhazia and South Ossetia.

Some experts believe there’s a compromise that could square that circle. Damon Wilson, director of the International Security Program at the Atlantic Council, said there could be some international presence on the Russia-Abkhazia and Russia-South Ossetia border, similar to the arrangement in Transnistria, a disputed territory on the border of Moldova and the Ukraine.

But he agreed with the Obama administration official that the burden to begin resolving Russia-Georgia issues that lie in the way of WTO membership is on Russia, not Georgia.

"Too many people frame this as ‘are the Georgians going to be the spoiler.’ That already puts the Georgians in a box," Wilson said. "The issue is, do the Russians want in the WTO or not and if so, what are they going to do?"

The Georgians are taking a reasonable position and are not trying to make a stink out of this, recognizing that their leverage is ultimately limited, he said. But their concerns are valid and represent a real trade concern that needs to be addressed.

"If Russia is going to be a part of this, it can’t enter on day one with some sort of exception. The first sign is that the Russians need to come to the table and talk to the Georgians."

Wilson’s views represent those of many in the Russia watching community in Washington who wonder if the Obama administration wants Russia to join the WTO more than Russia itself wants to join. After all, in addition to the economic benefits for the United States outlined by Summers, WTO membership for Russia is one deliverable Obama would like to point to as part of his "reset" policy.

"Russians have to want this," said David Kramer, former assistant secretary of State for Democracy, Human Rights, and Labor. "Russians have to choose whether they work with the Georgians to solve the problem or whether it’s more important for them to hold Georgia up as the obstacle."

Kramer, a frequent critic of the Obama reset policy, said the administration has taken exactly the right approach on this issue by putting the onus back on Russia and Georgia to work it out without U.S. mediation.

"Sure, [the administration] is looking to get some wins on the board for Russia reset, but the Bush administration was doing the same thing. If Bush was in office today, we’d be doing the START treaty and we’d be pushing WTO," Kramer said.

Meanwhile, there’s a growing murmur on Capitol Hill that the path toward U.S. support for Russian WTO membership in Congress might not be as assured as the administration might hope. Congress must repeal the 35-year-old Jackson-Vanick law, which was meant to support then Soviet emigrants. The law as currently written prevents the U.S. from granting Russian Permanent Normal Trade Relations status.

"Russia would be under no obligation to comply with its commitments to the US made in bilateral accession negotiations and the US would have no recourse to WTO dispute-resolution mechanisms. Essentially, we would get none of the benefits of having Russia inside the rules-based system if Jackson-Vanik isn’t repealed," said Samuel Charap, fellow at the Center for American Progress.

Although the Soviet emigrant issue no longer exists, a Republican-controlled Congress could resist that move due to concerns about Russia on any number of issues.

"When you look at the makeup of what the Congress is likely to look like next week, that’s not the most auspicious setting for the administration’s argument, so there would have be a serious push by the administration and supporters on the Hill to get this done," a senior GOP Congressional aide said.